Blue-chips started the week on a positive note as investors took heart from signs of pricing power in the UK manufacturing sector and better-than-expected earnings in the US banking sector.
The FTSE 100 closed 1.1 per cent higher at 3,849.4 and the mid-cap FTSE 250 pushed ahead by 0.5 per cent to 4,176.3. Volumes were very light, with only 1.7 billion shares changing hands.
MmO2, the mobile phone operator, rose 6.5 per cent to 53¼p to top blue-chip gainers after it agreed to sell its loss-making Dutch subsidiary, O2 Netherlands, to private-equity group Greenfield Capital Partners for €25 million. MmO2 said the sale would result in a one-off provision of £1.4 billion.
Merrill Lynch upgraded the stock to "buy" from "neutral" on the news.
Reuters, the struggling financial information group, rose 5.8 per cent to 113¼p ahead of a trading update due tomorrow. The stock was buoyed by the signing of a new contract with HSBC Holdings and also by upbeat results from Citigroup, suggesting the investment banking community, which Reuters relies on for revenues, was not faring quite as badly as feared.
ICI, the chemicals group, added 2.9 per cent to 116¼p on continuing hopes of impending action at its Quest fragrances division. Weekend reports suggested that the new chief executive, Mr John McAdam, was preparing to slash 2,000 jobs from the troubled division, just days after reports that Swiss company Givaudan was considering a bid for Quest.
Somerfield, the second-tier supermarket retailer, rose 6.1 per cent, to 74p, on strong volume of 25 million shares after Fidelity revealed it had increased its holding to 9.3 per cent from 8.7 per cent.
But Debenhams slid 6.7 per cent to 278p ahead of its interim results, due today. The department store had seen its shares rise 15 per cent in the previous two trading days on vague takeover talk, but yesterday saw a growing realisation that Debenhams might not follow Selfridges in attracting bid interest.
Biotechnology group Celltech firmed 9 per cent to 304p as it said it had bought a further 20.5 million shares in bid target Oxford Glycosciences (OGS) and now controls 49.7 per cent of the company. OGS closed flat at 182½p. - (Financial Times Service)
